Educational Articles

Down, But Not Out: Motorola Returns as a Big Player with the Most Promising iPhone Competitor to Date, the Droid.

Kevin Downing
| November 13, 2009

For the past few years, mentioning to someone that you just snagged the latest Motorola (MOT) handset has been more likely to elicit chuckles than pangs of jealousy. The once preeminent cell phone giant appears to have finally awakened from its slumber though, with the release of its ultra sleek and powerful smartphone, dubbed the Droid.

The phone runs on the much-lauded Verizon (VZ) network, and it appears that the nation’s largest service provider is using its new flagship device to steal some thunder from smartphone royalty Apple (AAPL) with its AT&T (T) exclusive iPhone 3G and 3GS models. Verizon’s recent “iDon’t” television spot simply lists all the features that the Droid has and the iPhone doesn’t. What may come as a surprise to the Apple faithful is the impressive length of that list.

Some of the Droid’s physical attributes not found on the iPhone include a faster processor, a larger and higher resolution screen, a better quality camera with a flash, and an interchangeable battery. Although certain “iPhone killers” have boasted some of these specs for months now, few, if any, have included them all for less than $200 (after a fairly standard $100 mail-in rebate).

The phone’s design has gotten overwhelmingly positive reviews, but one major complaint from tech circles has been the slide-out physical keyboard. In order to keep the phone thin, the design team made the keyboard flatter than your run-of-the-mill slide-out. This makes it fairly easy to mistype, but the keyboard still has an edge over most virtual varieties (which the Droid also has for that matter).

So apart from the prettier screen, clearer pictures and speedier processing what else does Motorola’s promising offering bring to the table? The answer to that question is simple; it’s the first phone to run Android 2.0, the newest version of Google’s (GOOG) smartphone operating system. Prior incarnations of this OS have been well received but not widely used, as they’ve mostly been limited to phones using the smaller Deutsche Telekom (DT) owned T-Mobile network. The Droid, and other upcoming Motorola phones, should help the much-hyped operating system gain prominence over Microsoft’s (MSFT) competing Windows mobile OS.

What really matters, however, is how it stacks up to the iPhone’s operating system. Even though Android 2.0 is quite intuitive, only non-Apple users are likely to find it easier to use than their current handset.

Something Android 2.0 can offer is a free turn for turn 3D GPS display called Google Maps Navigation. This service is similar to those available from Tom Tom and Garmin (GRMN). Such functionality costs users around $100 if they purchase it from Apple’s app store.

Android 2.0 is also capable of running up to six applications in the background. This comes in handy if you want to listen to Pandora Internet radio while simultaneously surfing the Web; for example. If you’re an iPhone user, you’re forced to completely exit a program in order to start another.

As any iPhone enthusiast will be quick to point out, the Android Marketplace only has one-tenth of the 100,000 plus apps that Apple boasts. This sounds like a major drawback, but it’s important to realize that quantity doesn’t necessarily translate to quality. In reality, the overwhelming majority of Apple’s apps go widely unused. What’s more, Google allows anyone to develop apps for Android phones, as opposed to Apple, which screens every piece of software it sells.

Another critical factor people consider when choosing a smartphone is the network it runs on. It’s common knowledge in the cellular world that Verizon’s 3G network has superior reach and reliability compared to the number two provider AT&T. That’s not to say that AT&T’s service can’t compete, but Verizon is generally known to have better overall coverage, especially in more rural areas. Despite the fact that many of the most stylish and technologically advanced phones have been exclusive to competing networks, Verizon’s user base has proven extremely loyal due to said service. Now that Verizon has the Droid, it’s likely that fewer people will abandon their beloved network to jump on the iPhone bandwagon.

The question remains: will the Droid’s differentiating features coupled with the more reliable network be enough to entice droves of iPhone owners to break contracts with AT&T and switch to Verizon? That is not likely. The more reasonable scenario is that the Droid will lure a greater number of Sprint (S) and AT&T customers without iPhones, to switch over before or shortly after their contracts expire.

Considering that initial sales of the Droid have been very strong, it seems as though Motorola may have a hit on its hands. Still, it’s not realistic to expect the type of sales that the iPhone delivered. As a point of reference, the Droid will do well to move a million units by yearend, a feat that both the iPhone 3G and 3GS achieved in their first three days on sale. Motorola doesn’t need those kinds of numbers to win back share of the cell phone market and garner interest in the stock anyway. It just needs to continue doing what it was once well known for… making phones that people love.